17 April 2013

Huge increase to Body Corporate Levies. ACAT?

| nemesisrocks
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I just got a levy notice from my Body Corporate Manager, which demands a new contribution levy that is 65% higher than last year.

When I first bought the apartment from Independent Property group in 2009, the salesman told me the Body Corporate fees would be $2200 per year.

The latest levy is around $3500 per year. Do I have grounds to go to ACAT over the massive increases?

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Hi Nemesisrocks, wondering if you have an update on what you did or found out following your post? I’m in a similar situation to you…thanks

Just to clarify .. did you expect the levies to be the same forever?

OpenYourMind12:00 pm 18 Apr 13

When buying a property managed by a Body Corporate, it’s always important to carefully examine the Body Corporate records for that property just to make sure there aren’t some serious costs or problems arising. Attending the AGM (often populated by retired people with lots of time and not a lot to do) or at least reading the minutes should help you understand why costs have increased.

blindcommissioner said :

I wonder how many people are going to feel the pinch and have to increase rental to compensate the increase fees.

That’s not how it works. Unlike sales prices, rental prices are actually a function of supply and demand for accommodation, not the costs of providing it. That’s why most rental properties are cash flow negative.

Try and charge above market rent and you’ll end up with an empty property.

Much the same as @someone commented above. Please note that BC fees can rise across a range of situations – not the least that they cover the cost of the building insurance and the assets that are in the complex. The rise (although as you described is very steep) – maybe associated with both capital works, insurance, replacing assets and managing the building.

While it has a cost to you personally – I would also be careful in agressively fighting the increase. While you don’t want to be paying more in BC fees than you should – if your BC goes broke, the value of your apartment will go through the floor and getting someone to buy it (or any other in the complex) is a real issue. In QLD – there was a complex near mine that had real BC issues in terms of viability… just killed sales in the complex for over a year. I’d be very careful in what you wish for.

Look back at the rental property management thread recently that talked about LiveIn being bought and now there is a duopoly with one side having to pay for the former LiveIn staff.

Geez, wait until your rates triple!

I assume from your description that:

1. You didn’t attend the owners’ corporation general meeting
2. You didn’t read the minutes of the owners’ corporation general meeting that would have been sent to you

In which case you have waived your bitchn’ rights. I doubt going to ACAT is going to achieve anything unless the strata manager screwed up and forgot to tick one of the boxes in the process.

Well, the sales man would have been right – in 2009, the levies would have been that amount. However, the BC may have had to undertake some substantial maintenance work on the common property; or the water bill went up dramatically. That kinda thing.

BC fees are set one year to the next; the amount one year is possibly indicative of what they will be next year, but there are no guarantees (at all) that they will be.

You would (should) have been sent a breakdown of the BC’s expenses when you got your notice of the levy. Start there – are there items on there that shouldn’t be? Has anything jumped a surprisingly large amount? If you haven’t held your AGM, raise the issues there. If others agree, you may have the expenses removed. If the AGM has been held, check against the minutes – was there an agreement to carry out extra work during the year? Our fee notice is always sent out before the AGM, so we can discuss it at the meeting.

I think you’re jumping the gun re ACAT: I don’t know the rules at all BUT… as I understand it, the BC is the decision making entity regarding property. It makes decisions by a majority vote of its members (property owners). You are bound by these majority decisions; if you want different decisions made, then you need to get involved with your BC committee, attend the meetings etc…

If you never attend the AGM and don’t participate on committees etc… I’m not sure you really have a leg to stand on. BC’s may suck, and BC committees suck even worse (and BC committee members suck worst of all) BUT if you’re not involved you’re going to be stuck with what they choose, wether you like it or not. And if that’s footing you with an extra $1K a year so they can redo the garden and put a new fence in, well… it sucks, but there you go.

I’d ask for a copy of the minutes of the meeting where the levies were determined.

In a past experience I have had with BC Fees, an unusual increase was due to a one off event (broken pipe that went unnoticed and incurred a high water use bill) and the increase was temporary.

Before running off to ACAT, do a little digging on where your money will be going.

And take a life lesson on how much you should trust a salesman 🙂

blindcommissioner2:35 pm 17 Apr 13

It is always a shock when charges are increased without any reasonable reason. Always do the sums and look at the pitfalls such as expenses that you can not control like taxes and such like. I wonder how many people are going to feel the pinch and have to increase rental to compensate the increase fees.

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